Internet bandwidth report: Have we reached “Peak Netflix?”

The "king" of North American Internet traffic just got even more powerful. The …

Remember that Sandvine report published five months ago that called Netflix the "king" of North American fixed download Internet data? That survey estimated the online video company's share at 29.7 percent of all peak download time, a 44 percent boost in Netflix's share of traffic since 2010.

Well, Sandvine has issued another estimate. Netflix now accounts for 32.7 percent of all North American peak fixed access downstream content. That's a relative increase of almost ten percent since the spring, and it puts Netflix way beyond the the other three top Internet protocols or services by daily volume—approaching double HTTP (17.48 percent), just shy of three times YouTube (11.32), and nearly four times BitTorrent.

Sandvine

"This fact is of particular importance to network operators, since it means that most video traffic adapts to network congestion by shifting to lower bitrates and quality, which impacts the subscriber quality of experience," the network management company suggests in its latest Global Internet Phenomena Report. "From a network engineering perspective, it means that when capacity is increased, adaptive video simply upshifts to a higher fidelity and fills the new capacity."

Then there's another question: How much more of North America's fixed peak download share can Netflix claim? Has the company peaked?

Absent an explanation

This report comes shortly after Netflix offered a worrisome forecast for the company. On Monday, the video giant predicted that its Euro-launch, which is coming in tandem with a huge loss in North American customers, may take it into the red ink zone for several quarters. The company disclosed that it lost a whopping 800,000 subscribers following its split of DVD rental and streaming services.

"We think that $7.99 for unlimited streaming and $7.99 for unlimited DVD are both very aggressive low prices," the investor letter explained. "What we misjudged was how quickly to move there." The firm also acknowledged that it "compounded the problem" with a lack of explanation about the rising costs of DVD content. "So absent that explanation, many perceived us as greedy."

But Sandvine is less interested in Netflix's quarterly projected outcome than in its share of total Internet traffic in the United States. "Have we seen 'peak Netflix'?" the survey asks. The report approaches this question cautiously. It doesn't expect a huge decline in traffic, because of the widespread availability of Netflix-capable devices, such as video capable game consoles, set top boxes, and interfaces like Apple TV.

Post PC

Indeed, Netflix seems to be benefiting from the rise of the "post-PC era," as Sandvine calls it—a period in which most of what the company calls Real-Time Entertainment streaming on North American fixed access systems ends up on devices other than laptops and desktops. Add tablets and mobile gadgets to the mix, and they claim around 55 percent of all RTE traffic.

Sandvine

"It's hard to envision a scenario in which absolute levels of Netflix will decline," the Sandvine report meditates. "However, Netflix is facing increased local competition, and as a result new services might grow at a faster rate."

Meanwhile Bloomberg reports that Netflix is laying off some of its workers, according to two individuals "with knowledge of the decision." The cuts will come mostly in human resources, "where Netflix had hired in anticipation of faster growth and the creation of separate companies for its mail-order and streaming businesses," the story says.

"Globally, Netflix will grow," the Sandvine report's section on Netflix predicts. After all, the service is available in close to 50 nations. But "in the United States specifically, we might have seen the peak."

I find it hard to believe people find that much content on Netflix that is actually worth streaming.

Netflix streaming is great for TV shows -- but crap for new movies...I can only imagine what their share of peak fixed access downstream content would be if they also had new movies available for streaming.

"From a network engineering perspective, it means that when capacity is increased, adaptive video simply upshifts to a higher fidelity and fills the new capacity."

I see no reason to think that this has no upper limit. Once you get the bandwidth to stream HD1080p content, there's really nowhere higher for it to go. At least not for the foreseeable future.

Quote:

"Have we seen 'peak Netflix'?"

It seems to me that online streaming is still a somewhat niche activity, so as it gains mainstream acceptance we should see bandwidth use continue to grow. Even amongst existing users, we should see growth as Netflix is able to bring more content to the service.

Given these statistics, are ISPs still "justifying" crippling bittorrent because it's a "bandwidth hog"? I'd like to see them try to cripple netflix.

They cripple Netflix indirectly, via data caps. Data caps that their video-on-demand services don't count toward, I might add. As the bandwidth goes down, so does the quality of the Netflix stream, and as that quality degrades, those VOD services start looking more attractive. This is why we need Net Neutrality legislation.

Glenn wrote:What's up with Netflix being 7.69% of UPSTREAM bandwidth? That really doesn't seem right, it's not a P2P stream.

Whenever you download something, you use about 2-3% of that downstream bandwidth to send ACK (acknowledgement) packets in the other direction. As a result downstream and upstream per source are correlated, and when you have a huge slice of the pie of downstream, you'll see an effect on the (smaller) upstream pie.

I for one never had cable growing up, or even through college. Therefore I missed out on a lot of old movies and Netflix is there to fill that gap. To those who have seen allthose old movies, I can understand how NetFlix is a bit of a bummer.

Fuck Sandvine. Seriously. They're the major bandwidth throttling equipment vendor that provides throttling services to most of the North American ISPs. Every "report" that comes out of these scumbags should be considered biased and worthless, period.

Netflix could just be having problems because the movie studios are choking them like Darth Vader, leaving them gasping for content and having to pay ridiculous sums of money for rights to offer service that the studios won't provide themselves.

I wouldn't mind seeing the Peak Period Chart scaled correctly. Obviously the total data volume from 2009-2011 should have grown. While percentages are nice, I'd like to see the actual consumption of each group in relation to past years.

According to their chart lots of things have appeared and disappeared from year to year...

I imagine there are a lot of people like me who, for lack of funds and/or desire to pay cable companies their pound of flesh, only have DSL; and that means streaming video is out of the question. The DSL I have is just adequate for web browsing and stutters even on YouTube video, let alone high quality streaming movies. Skype works OK, and that's about the limit. So, I suspect that, for a large percentage of the population, streaming video is a luxury and physical discs will live on for a long time.

I for one never had cable growing up, or even through college. Therefore I missed out on a lot of old movies and Netflix is there to fill that gap. To those who have seen allthose old movies, I can understand how NetFlix is a bit of a bummer.

Even if you have seen all of the old films, being able to see old films not edited for television adds an entire new dimension and allows a greater appreciation.

Fuck Sandvine. Seriously. They're the major bandwidth throttling equipment vendor that provides throttling services to most of the North American ISPs. Every "report" that comes out of these scumbags should be considered biased and worthless, period.

Agreed. Anything from Sandvine I read first as, "Here are some scary reasons you ISPs should be buying our products."

But this does shed some light on the ISP's complaints about peering and whatnot. If this is the kind of chart they're looking at, Netflix is a scourge rivaled only by BitTorrent... if BitTorrent is evil because of all the Internets it uses, then Netflix is evil, too!

I find it hard to believe people find that much content on Netflix that is actually worth streaming.

Well then you haven't looked at what's available to stream on Netflix lately. I just watched Kevin Smith's new movie Red State and it was great. Not only does the resolution look very close to Bluray quality, there is a lot to choose from. The wife and I just finished watching the British comedy The IT Crowd, but now are working our way through Luther. There is a lot of content on there. It may not have the most recently recently released DVD's but who cares, they have a huge library of slightly older content and if you have to have the latest release, just request it on DVD or Bluray form.

This tells me that people are almost unanimously willing to pay for content, provided it's convenient and reasonably priced.

Which further tells me that the studios' continual attempts to pitch all problems as result of piracy are, at best, wildly mistaken.

As for the upstream/downstream disparity between Netflix down and bittorrent up...that's a red herring. Consider that most americans have probably 1/8 the upstream bandwidth that they do down, and it shows the numbers are kinda skewed.

"I will gladly sell you a cheeseburger today as long as you promise not to eat all of it so I can sell the rest to your neighbor at full price tomorrow."

Both end users and Netflix pay for their connections to the Internet. As someone who used to work at an ISP, I know the ISPs love to over-sell their capacity, but that's only something you can do for a short time. Eventually you either pay for sufficient upstream capacity to satisfy your commitments to your customers or you admit you're trying to cheat.

Glenn wrote:What's up with Netflix being 7.69% of UPSTREAM bandwidth? That really doesn't seem right, it's not a P2P stream.

Whenever you download something, you use about 2-3% of that downstream bandwidth to send ACK (acknowledgement) packets in the other direction. As a result downstream and upstream per source are correlated, and when you have a huge slice of the pie of downstream, you'll see an effect on the (smaller) upstream pie.

Unless UDP is used, in which case there would be nearly 0% upstream traffic as no ACKs are required. The only upstream traffic would be playback control. I wonder why Netflix uses TCP/IP rather than UDP?

There's so much FUD around Netlfix now. Yes a "whopping" 810,000 people canceled, and a mere 21,000,000+ people didn't. Clearly "everyone" is abandoning the company.

And OMG the company is laying off people! Yes, 15 out of 2,100 people have been laid off. This is really news? Tiny numbers of people get laid off all the time, and this is a tiny number. Meanwhile Netflix is advertising for 40 open positions. If they fill 15 of those, is Bloomberg going to write a new story about how Netflix is adding staff? I'm guessing not...

Glenn wrote:What's up with Netflix being 7.69% of UPSTREAM bandwidth? That really doesn't seem right, it's not a P2P stream.

Whenever you download something, you use about 2-3% of that downstream bandwidth to send ACK (acknowledgement) packets in the other direction. As a result downstream and upstream per source are correlated, and when you have a huge slice of the pie of downstream, you'll see an effect on the (smaller) upstream pie.

Unless UDP is used, in which case there would be nearly 0% upstream traffic as no ACKs are required. The only upstream traffic would be playback control. I wonder why Netflix uses TCP/IP rather than UDP?

That is not even close to being true... UDP is not a reliable transport. To transfer real-time media over it, you'll have to account for packet loss, packet duplication, out-of-order packets, jitter, flow control, etc... (Yes, my first job at this company was building out a media streaming network). To implement all these things takes > 0% upload traffic.

At the very basic level, even if you use UDP, you still have to send an ACK, because UDP is not a reliable transport, so the receiver will need to let the server know if it received a packet, otherwise the server will never know if you ever got the packet. The only difference would be at which layer in the network stack you send the ACK...

"From a network engineering perspective, it means that when capacity is increased, adaptive video simply upshifts to a higher fidelity and fills the new capacity."

I see no reason to think that this has no upper limit. Once you get the bandwidth to stream HD1080p content, there's really nowhere higher for it to go. At least not for the foreseeable future.

There is the matter of video quality. HD Netflix isn't very high quality as far as HD goes. Blu-ray films are typically 14 to 40 megabits/second. A home connection would have to be one of the higher FiOS tiers to even be capable of that.

Glenn wrote:What's up with Netflix being 7.69% of UPSTREAM bandwidth? That really doesn't seem right, it's not a P2P stream.

Whenever you download something, you use about 2-3% of that downstream bandwidth to send ACK (acknowledgement) packets in the other direction. As a result downstream and upstream per source are correlated, and when you have a huge slice of the pie of downstream, you'll see an effect on the (smaller) upstream pie.

Unless UDP is used, in which case there would be nearly 0% upstream traffic as no ACKs are required. The only upstream traffic would be playback control. I wonder why Netflix uses TCP/IP rather than UDP?

That is not even close to being true... UDP is not a reliable transport. To transfer real-time media over it, you'll have to account for packet loss, packet duplication, out-of-order packets, jitter, flow control, etc... (Yes, my first job at this company was building out a media streaming network). To implement all these things takes > 0% upload traffic.

At the very basic level, even if you use UDP, you still have to send an ACK, because UDP is not a reliable transport, so the receiver will need to let the server know if it received a packet, otherwise the server will never know if you ever got the packet. The only difference would be at which layer in the network stack you send the ACK...

This is quite true. A good example is the usage of RTP/RTCP for VOIP over UDP. Since the network stack doesn't implement a form of ACK it's built into the software layer. You still have to be able to handle control messages and determine QoS, which means sending messages back up to the server.

Netflix streaming quality is not even close to Blu-Ray. It's not even good 720p broadcast quality - the sound generally stinks for starters. As far as content goes - it doesn't have the lastest big time content for streaming. It's fine for hipsters who like to watch 'edgy' stuff - or people who want old content. Though honestly Amazon does okay with hipsters. They pretty much have the whole BBC catalogue and the quality is slighty superior IMHO.

I keep netflix for the blu-rays. If you can wait a bit you get much higher quality and much much much better sound. The trick of course is having a good speaker/reciever combo really elevates blu-ray.

The streaming stuff is just in case I run out of stuff to watch that I recorded on my HTPC, and I run out of anime my g/f loves from Crunchy Roll.

Netflix big problem is it can't compete with free. You pay for outdated or small time content.. Sure Kevin Smith's lastest movie. But how many people wanted to see that in the theatre? Both Crunchy Roll and Hulu do better in the competing with free department as they have more timely content.

I am not leaving Netflix though - it's pretty cheap for the entertainment choices they have. I think in the long run though the content producers will bury them. You would be surprised how much of their content is related to Starz. It's a shockingly huge amount.

At the very basic level, even if you use UDP, you still have to send an ACK, because UDP is not a reliable transport, so the receiver will need to let the server know if it received a packet, otherwise the server will never know if you ever got the packet. The only difference would be at which layer in the network stack you send the ACK...

Why would Netflix "need" to know if you received every packet? It's not like a few dropped packets here and there would cause major problems. Yes you might see a few breaks or pixelation in the video (same as if a packet got dropped when watching digital cable), but that's no different than what would happen if a TCP/IP packet didn't get sent. Actually with TCP/IP it would be worse since a bunch of dropped packets would trigger a retransmit which could cause the entire buffer to end up being dropped and the need to rebuffer again.

Basically TCP/IP for streaming video is overkill. If you want to send ACKs every 30 seconds or so just to make sure the video is still streaming, okay, but there's no need to ACK every packet since packet delivery for video isn't mission critical.

VOIP is a different beast since that's 2-way communication and dropped packets will affect VOIP a lot more because of the small amount of data transferred compared with video. Also VOIP would be considered more "mission critical" than streaming video. Even with VOIP, I doubt every packet is ACKed as I've had instances using VOIP where the audio breaks up when the connection is experiencing packet loss.

There's so much FUD around Netlfix now. Yes a "whopping" 810,000 people canceled, and a mere 21,000,000+ people didn't. Clearly "everyone" is abandoning the company.

And OMG the company is laying off people! Yes, 15 out of 2,100 people have been laid off. This is really news? Tiny numbers of people get laid off all the time, and this is a tiny number. Meanwhile Netflix is advertising for 40 open positions. If they fill 15 of those, is Bloomberg going to write a new story about how Netflix is adding staff? I'm guessing not...

U mad....about your Netflix stock dropping 60%?

I'm kind of surprised by the amount of bandwidth instant messaging is taking. Either it's more inefficient than I thought or people are using it quite a lot to share big files. Probably the latter.

At the very basic level, even if you use UDP, you still have to send an ACK, because UDP is not a reliable transport, so the receiver will need to let the server know if it received a packet, otherwise the server will never know if you ever got the packet. The only difference would be at which layer in the network stack you send the ACK...

Why would Netflix "need" to know if you received every packet? It's not like a few dropped packets here and there would cause major problems. Yes you might see a few breaks or pixelation in the video (same as if a packet got dropped when watching digital cable).

Do you have Netflix? Because it doesn’t have those same signal degradation characteristics (like where a number of the pixel cells fall out of sync and appear as “garbage” until their screen location changes). Also, as mentioned in other posts Netflix will even lower its bandwidth use to adapt to your connection. They do a pretty good job of providing a constant, error free (if sometimes more lossy compression) stream.

Do you have Netflix? Because it doesn’t have those same signal degradation characteristics (like where a number of the pixel cells fall out of sync and appear as “garbage” until their screen location changes). Also, as mentioned in other posts Netflix will even lower its bandwidth use to adapt to your connection. They do a pretty good job of providing a constant, error free (if sometimes more lossy compression) stream.

I was just going to say this. I stream a LOT from NetFlix, and the only complaint I've ever had with the service is that on rare occasions, the audio gets out of sync with the video on certain shows. When that happens, I either reboot my PS3 or I just go watch something else and come back later to the offending show.

Generally, when I first start streaming a show, it will appear "out of focus", pixelated, and generally "trashed". But as the service determines I have high throughput, the quality improves. And it usually doesn't take more than a couple seconds to do so.

Matthew Lasar / Matt writes for Ars Technica about media/technology history, intellectual property, the FCC, or the Internet in general. He teaches United States history and politics at the University of California at Santa Cruz.